Multiband Announces 2011 Fourth Quarter and Record Year End Results; Provides 2012 Guidance

Multiband Announces 2011 Fourth Quarter and Record Year End Results; Provides 2012 Guidance

Record Revenues of $300.2 million in 2011, up 13.0% from $265.6 million in 2010

Record Full year Adjusted EBITDA of $24.0 million, up 10% from $21.8 million in 2010

Income from operations increased to $14.7 million from $13.7 million in year-ago period

Income before Taxes Totals $10.7 million, up 11.2% over 2010

Multiband Provides 2012 Revenue Guidance of $320 million and EBITDA of $23 to $26 million

MINNEAPOLIS, March 26, 2012 /PRNewswire/ -- Multiband Corporation, (NASDAQ:MBND), a leading Home Service Provider (HSP) for DIRECTV and the nation's largest DIRECTV Master System Operator (MSO) for Multiple Dwelling Units (MDU's), today announced financial results for the fourth quarter and year ended December 31, 2011.

2011 Financial and Business Highlights

-- Fourth quarter revenues were up 9.9% to $77.6 million compared to $70.6
million for the quarter ended December 31, 2010.
-- Operating income for the year increased to $14.7 million compared $13.7
million in the year-ago period.
-- Adjusted EBITDA, a non-GAAP measure, was $24.0 million for 2011, up
10.0% from $21.8 million in 2010.
-- Net Income before Taxes was $10.7 million, up 11.2% over the $9.6
million a year ago.
-- Net cash flow from operations grew to $21.1 million compared to $11.7
million in the year-ago period.
-- In June, completed a secondary public offering of stock that provided
net proceeds of $16.2 million, distributing 12.9 million shares amongst
a large number of institutional holders and significantly reducing
outstanding preferred shares.
-- In September, acquired two entities from WPCS International, Inc. that
provide intellectual property in the areas of wired and wireless
telecommunications, including public safety networks, and renewable
energy services including wind and solar applications, as well as other
design and construction services.
-- In August, signed a new Master System Operator agreement with DIRECTV.

Fourth Quarter 2011 Results

Revenues for the three month period ended December 31, 2011 of $77.6 million increased $7.0 million, or 9.9%, compared to $70.6 million for the quarter ended December 31, 2010. In the 2011 quarter, Field services segment (FS) revenues increased by $4.9 million, or 7.6%, fueled by increases in DIRECTV upgrade work orders and DIRECTV incentive income. MDU revenues were consistent year-over-year while the two entities acquired from WPCS in September 2011 contributed revenues of $2.9 million during the quarter.

Fourth quarter 2011 gross margins were 29.9%, comparable to 30.4% for the year-ago period.

Selling, general and administrative expenses for the fourth quarter of 2011 increased $3.3 million, or 21.3%, to $18.8 million (24.2% of revenues) from $15.5 million (21.9% of revenues) in the same period last year. In 2011, increases in non-cash compensation costs and legal expenses together with expenses associated with the two entities acquired from WPCS in September 2011, including the balance of the security deposited that was forfeited in February 2012, collectively accounted for the increase.

Operating income was $2.4 million for the quarter ended December 31, 2011, compared to operating income of $4.1 million in the same period last year. The increase in revenue was offset by the slight decline in gross margins and the increase in selling, general & administrative expenses as noted above.

In the fourth quarter of 2011, Multiband generated net income attributable to common stockholders of $1.4 million, or $0.06 per basic and diluted share, compared to net income of $11.7 million, which included an $8.9 million income tax benefit, or $1.14 per basic and $0.73 per diluted share in the year-ago period. The current year results were impacted by an adjustment to the book value of securities held which resulted in a write down of $1.1 million, or $.05 per basic and fully diluted share. In the year ago period, absent the tax benefit, net income attributable to common stockholders would have been $2.8 million or $0.27 per basic and $0.17 per diluted share.

Adjusted EBITDA, a non-GAAP measure, was $5.2 million for the fourth quarter of 2011 compared to $5.5 million in the year-ago period. Multiband maintains a revolving lease facility for the vehicles used in its daily operations. These leases are required to be treated as an operating lease for purposes of GAAP. Certain peers in our sector may have vehicle leases that qualify for capital lease treatment for GAAP purposes. Accordingly, the vehicle lease payments made of approximately $2.5 million and $2.0 million during the three months ended December 31, 2011 and 2010, respectively, would need to be added back to the adjusted EBITDA figures above in order to be comparable to a company whose vehicle leases are accounted for as capital leases. If these lease payments were added back, our adjusted EBITDA would be $7.7 million and $7.5 million for the three months ended December 31, 2011 and 2010, respectively.

Annual 2011 Financial Results

Revenues for the year ended December 31, 2011 increased $34.6 million, or 13.0%, to $300.2 million from $265.6 million for the year ended December 31, 2010. FS segment revenues increased $29.4 million, or 12.1%, as a result of a 4.8% increase in DIRECTV work order volume, an increase in incentive income of $10.0 million and because of amounts received from DIRECTV under a fuel subsidy program which totaled $2.3 million. MDU segment revenue declined by 3.0%, or $0.7 million, during 2011 due to a decline in system operator related revenues. The slight decrease was caused by tighter credit policies imposed by DIRECTV which, in turn, is expected to improve customer churn and reduce bad debt expense. MDU construction related revenue increased $2.0 million over 2010 levels while the two entities acquired from WPCS in September 2011 contributed revenue of $3.9 million.

Gross margins for the 2011 year were 28.5% compared to 29.9% last year. Fleet expenses increased as a percentage of revenue as a result of a rise in fuel costs between the periods.

Selling, general and administrative expenses for 2011 increased $6.7 million, or 11.8%, to $63.9 million (21.3% of revenues) from $57.2 million (21.5% of revenues) in the same period last year.

Operating income was $14.7 million for the year ended December 31, 2011 compared to income of $13.7 million in the same period last year. This $1.0 million (7%) improvement was achieved due to the increased revenues together with stabilized gross margins and operating expenses.

Multiband generated net income attributable to common stockholders of $6.3 million, or $0.37 per basic and $0.32 per diluted share compared to income of $13.2 million, which included a $5.1 million income tax benefit, or $1.32 per basic and $0.91 per diluted share in the same period of 2010. The current year results were impacted by an adjustment to the book value of securities held which resulted in a write down of $1.1 million, or $0.06 per basic and $0.05 per diluted share. In the year ago period, absent the tax benefit, net income attributable to common stockholders would have been $8.1 million or $0.81 per basic and $0.52 per diluted share.

Adjusted EBITDA, a non-GAAP measure, was $24.0 million for 2011 compared to $21.8 million in the year-ago period, an increase of 10.0%. The Company maintains a revolving lease facility for the vehicles used in its daily operations. These leases are required to be treated as an operating lease for purposes of GAAP. Certain peers in our sector may have vehicle leases that qualify for capital lease treatment for GAAP purposes. Accordingly, the vehicle lease payments made of approximately $9.3 million and $7.9 million during the years ended December 31, 2011 and 2010, respectively, would need to be added back to the adjusted EBITDA figures above in order to be comparable to a company whose vehicle leases are accounted for as capital leases. If these lease payments were added back, our adjusted EBITDA would be $33.3 million and $29.7 million for the years ended December 31, 2011 and 2010, respectively.

Multiband generated approximately $21.1 million in operating cash flow for the year ended December 31, 2011 compared to $11.7 million in the same period last year, which resulted in a $17.9 million improvement in working capital from a deficit of $10.4 million as of the end of 2010 to a positive position of $7.5 million as of the end of 2011. Cash and cash equivalents, available-for-sale securities and accounts receivable, net totaled $47.7 million as of December 31, 2011 compared to $18.4 million at December 31, 2010.

James L. Mandel, CEO of Multiband, commented, "2011 was another successful year for Multiband, a year in which we produced record levels of revenue and EBITDA. We continue to be the premier provider of installation services for our partner, DIRECTV. In addition, we started to execute on our diversification plan and have successfully integrated the businesses acquired from WPCS and have obtained a fulfillment contract with two major broadband cable providers. These new announced businesses will contribute significant levels of revenue and EBITDA in the future."

Mr. Mandel continued, "2012 will no doubt present continued challenges for us but I remain confident in our team's ability to execute on our plans. We are actively discussing new financing alternatives with several lending groups to replace certain seller financing which matures next year and we're focused on securing not only replacement but, expanded levels of debt capital so we can continue our diversification plan via other strategic acquisitions."

Mr. Mandel concluded, "We continue to strengthen our balance sheet. Working capital has improved from a deficit position at the end of 2010 to $7.5 million at the end of 2011. Stockholders' equity has increased by 113% to $43.0 million as of December 31, 2011, from $20.2 million as of December 31, 2010."

2012 Revenue and Adjusted EBITDA Guidance

Based on our current visibility, we expect 2012 revenue of approximately $320 million and adjusted EBITDA of approximately $23-26 million.

Conference Call Information

A conference call and live webcast will take place Monday, March 26, 2012 at 4:30 p.m. Eastern Daylight Time.

Anyone interested in participating should call 1-877-941-2068 if calling within the United States or 1-480-629-9712 if calling internationally. There will be a playback available until April 2, 2012. To listen to the playback, please call 1-877-870-5176 if calling within the United States or 1-858-384-5517 if calling internationally. Please use pin number 4525679 for the replay.

The call will also be accompanied live by webcast over the Internet and accessible at: http://viavid.net/dce.aspx?sid=00009515

About Multiband Corporation

Multiband Corporation (Nasdaq: MBND) engages with a vast and growing array of technologies including renewable energy, wireless infrastructure, electrical power systems, digital signage, commercial audio/video solutions, hospitality IPTV and VOD systems. Multiband completes nearly 20% of all DIRECTV's installations, maintenance and upgrades for residents of single-family homes. Multiband also supplies broadband cable and satellite internet solutions for homes and businesses across the nation. As the largest nationwide DIRECTV master system operator in the Multiple Dwelling Unit (MDU) market and one of the largest full-service home service providers (HSPs), Multiband is a driven leader in a competitive industry. Additionally, Multiband is a leading provider of software and integrated billing services to MDUs on a single bill, including video, voice, data and other value-added local services, both directly and through strategic partnerships. Multiband focuses on providing world-class customer service and the highest level of performance for all partners and customers, from multinational corporations to individual families. Multiband is headquartered in Minneapolis, Minn., and has offices strategically placed around the continental United States.

Statements about our future expectations are "forward-looking statements" within the meaning of applicable Federal Securities Laws, and are not guarantees of future performance. When used herein, the words "may," "will," "should," "anticipate," "believe," "appear," "intend," "plan," "expect," "estimate," "approximate," and similar expressions are intended to identify such forward-looking statements. These statements involve risks and uncertainties inherent in our business, including those set forth in our most recent Annual Report on Form 10-K for the year ended December 31, 2010, and other filings with the SEC, and are subject to change at any time. Our actual results could differ materially from these forward-looking statements. We undertake no obligation to update publicly any forward-looking statement.

Company Contact

Contact: James Mandel, CEO for Multiband Corporation at (763)504-3000

Investor Contact

Cameron Donahue, Hayden IR, (651) 653-1854 or cameron@haydenir.com

- tables follow -

MULTIBAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009
(in thousands, except share and per share amounts)

2011 2010 2009
---- ---- ----
$300,186 $265,594 $268,994
REVENUES -------- -------- --------

COSTS AND EXPENSES
Cost of products and services (exclusive of
depreciation and amortization shown
separately below) 214,559 186,294 207,533
Selling, general and administrative 63,939 57,173 57,778
Depreciation and amortization 6,757 8,298 10,906
Impairment of assets 246 160 -
--- --- ---

Total costs and expenses 285,501 251,925 276,217
------- ------- -------

INCOME (LOSS) FROM OPERATIONS 14,685 13,669 (7,223)
------ ------ ------

OTHER EXPENSE
Interest expense (3,838) (4,202) (4,104)
Interest income 35 8 19
Proceeds from life insurance 409 - -
Gain on bargain purchase 166 - -
Other-than-temporary impairment loss on
available-for-sale securities (1,078) - -
Other income 276 103 337
--- --- ---

Total other expense (4,030) (4,091) (3,748)
------ ------ ------

INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTEREST IN SUBSIDIARIES 10,655 9,578 (10,971)

PROVISION FOR (BENEFIT FROM) INCOME TAXES 3,611 (5,116) 406
----- ------ ---

NET INCOME (LOSS) 7,044 14,694 (11,377)

LESS: NET LOSS ATTRIBUTABLE TO THE
NONCONTROLLING INTEREST IN SUBSIDIARIES - - (1,727)
--- --- ------

NET INCOME (LOSS) ATTRIBUTABLE TO MULTIBAND
CORPORATION AND SUBSIDIARIES 7,044 14,694 (9,650)
Preferred stock dividends 787 1,488 370
--- ----- ---
INCOME (LOSS) ATTRIBUTABLE TO COMMON
STOCKHOLDERS $6,257 $13,206 $(10,020)
====== ======= ========

INCOME (LOSS) PER COMMON SHARE - BASIC $0.37 $1.32 $(1.04)
===== ===== ======
INCOME (LOSS) PER COMMON SHARE - DILUTED $0.32 $0.91 $(1.04)
===== ===== ======

Weighted average common shares outstanding -
basic 16,975,753 10,016,717 9,665,316
========== ========== =========
Weighted average common shares outstanding -
diluted 20,626,529 15,617,353 9,665,316
========== ========== =========

MULTIBAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2011 AND 2010

ASSETS
(in thousands)

2011 2010
---- ----
CURRENT ASSETS
Cash and cash equivalents $18,169 $1,204
Available-for-sale securities (see Note 3) 1,191 2
Accounts receivable, net 28,359 17,223
Other receivable (see Note 18) - 518
Inventories 14,276 11,066
Costs and estimated earnings in excess of
billings on uncompleted contracts 998 -
Prepaid expenses and other 1,351 1,939
Current portion of notes receivable 10 6
Income tax receivable 42 3,133
Deferred tax assets - current 6,862 7,527
----- -----
Total Current Assets 71,258 42,618
------ ------
PROPERTY AND EQUIPMENT, NET 6,304 7,177
----- -----
OTHER ASSETS
Goodwill 37,796 38,042
Intangible assets, net 14,597 17,435
Other receivable - long-term (see Note 18) 14 352
Notes receivable - long-term, net of current
portion 18 27
Insurance collateral - long-term 8,061 3,749
Other assets 2,420 2,300
----- -----
1,134 -
----- ---
Deferred income tax benefit - long-term

Total Other Assets 64,040 61,905
------ ------

TOTAL ASSETS $141,602 $111,700
======== ========

MULTIBAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2011 AND 2010

LIABILITIES AND STOCKHOLDERS' EQUITY
(in thousands, except share and liquidation preference amounts)

2011 2010
---- ----
CURRENT LIABILITIES
Line of credit $ - $49
Short-term debt 457 544
Related party debt - short-term - 165
Current portion of long-term debt, net of
original issue discount 4,936 -
Current portion of capital lease obligations 324 444
Accounts payable 32,354 26,997
Billings in excess of costs and estimated
earnings on uncompleted contracts 41 -
Accrued liabilities - current 24,113 22,971
Deferred service obligations and revenue 1,570 1,822
----- -----
Total Current Liabilities 63,795 52,992
LONG-TERM LIABILITIES
Accrued liabilities - long term 5,352 3,697
Long-term debt, net of current portion and
original issue discount (see Note 18) 29,229 34,380
Capital lease obligations, net of current
portion 274 356
Deferred tax liabilities - long term - 32
--- ---
Total Liabilities 98,650 91,457
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Cumulative convertible preferred stock, no
par value:
8% Class A (12,696 and 14,171 shares issued
and outstanding, $133,308 and $148,796
liquidation preference) 191 213
10% Class C (109,000 and 112,000 shares
issued and outstanding, $1,090,000 and
$1,120,000 liquidation preference) 1,411 1,453
10% Class F (150,000 shares issued and
outstanding, $1,500,000 liquidation
preference) 1,500 1,500
8% Class G (10,000 and 11,595 shares issued
and outstanding, $100,000 and $115,950
liquidation preference) 41 48
6% Class H (1.00 and 1.23 shares issued and
outstanding, $100,000 and $123,000
liquidation preference) - -
8% Class J (0 and 100 shares issued and
outstanding, $0 and $10,000,000 liquidation
preference) - 10,000
15% Class E cumulative preferred stock, no
par value, (0 and 195,000 shares issued and
outstanding, $0 and $1,950,000 liquidation
preference) - 1,950
Common stock, no par value (21,612,380 and
10,305,845 shares issued and outstanding) 66,290 39,311
Stock-based compensation 49,000 47,504
Accumulated other comprehensive income -
unrealized gain on available-for-sale
securities - 2
Accumulated deficit (75,481) (81,738)
------- -------
Total Stockholders' Equity 42,952 20,243
------ ------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $141,602 $111,700
======== ========

EBITDA Computation (2011, 1Q11 - 4Q11) (in thousands)

2011 4Q11 3Q11 2Q11 1Q11
---- ---- ---- ---- ----
(i) Net Income (Quarter) $7,044 $1,422 $3,679 $2,035 $(92)
(ii) Non Operating
Gains/Losses 2,524 1,624 208 191 501
----- ----- --- --- ---
(iii) Adjusted Net Income $9,568 $3,046 $3,887 $2,226 $409
(Sum of (i)minus (ii)
(iv) Interest Expense 3,838 849 1,038 965 986
(v) Depreciation & Amortization 7,004 2,018 1,566 1,705 1,715
(vi) Taxes 3,611 ( 758) 2,869 1,549 (49)
(vii) EBITDA $24,021 $5,155 $9,360 $6,445 $3,061
======= ====== ====== ====== ======
iii + iv + v + vi

NON-GAAP Financial Measures

To comply with Regulation G promulgated pursuant to the Sarbanes-Oxley Act, Multiband Corporation attached to this news release and will post to the company's investor relations web site (www.multibandusa.com) any reconciliation of differences between non-GAAP financial information that may be required in connection with issuing the company's quarterly financial results.

The Company, as is common in its industry, uses Adjusted EBITDA as a measure of performance to demonstrate earnings exclusive of interest and non-cash events. The Company manages its business based on its cash flows. The Company, in its daily management of its business affairs and analysis of its monthly, quarterly and annual performance, makes its decisions based on cash flows, not on the amortization of assets obtained through historical activities. The Company, in managing its current and future affairs, cannot affect the amortization of the intangible assets to any material degree, and therefore uses Adjusted EBITDA as its primary management guide. Since an outside investor may base its evaluation of the Company's performance based on the Company's net loss not its cash flows, there is a limitation to the Adjusted EBITDA measurement. Adjusted EBITDA is not, and should not be considered, an alternative to net loss, loss from operations, or any other measure for determining operating performance of liquidity, as determined under accounting principals generally accepted in the United States (GAAP). The most directly comparable GAAP reference in the Company's case is the removal of interest, depreciation, amortization, taxes and other non-cash expense.

SOURCE Multiband Corporation

Multiband Corporation

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